The Digital Economy and Ecommerce in Africa – Drivers of the African Free Trade Area?

The report examines the intersection of Africa's digital economy and the AfCFTA, highlighting how ecommerce can overcome the continent's low formal retail penetration and lack of manufacturing diversity. While identifying significant barriers—including high data costs, poor logistics, and regulatory fragmentation—it argues that a unified trading bloc will provide the economies of scale necessary for SMEs to grow. The author recommends harmonising data privacy, consumer protection, and payment systems to foster trust and enable a sustainable, inclusive digital market.

• The African Continental Free Trade Area (AfCFTA) is expected to significantly boost intra-African trade; UNCTAD forecasts that an initial 90% reduction in tariffs could increase this trade by 52.3%, and a full removal of tariffs could double it.
• Africa's formal retail infrastructure is extremely low compared to other regions, with fewer than 15 formal retail stores per 1 million people, suggesting ecommerce can 'leapfrog' traditional brick-and-mortar retail.
• Logistics costs in Africa are disproportionately high, adding an average of 320% to the cost of manufactured goods, compared to approximately 90% in Europe.
• High mobile data costs create a 'digital divide'; Africans pay an average of 7.1% of their monthly salary for 1GB of data, which is more than 3.5 times the 2% affordability threshold.
• Financial constraints are a major barrier for African digital start-ups, with 39% of companies citing lack of finance as a serious operational hurdle, compared to 11% in Asia and 17% in Europe.
• Cybercrime is a significant threat to the digital economy's growth due to a lack of legislation and specialists; only 28 of the 55 AU member states have cybercrime regulations.
• The digital economy has the potential to create 3 million new jobs in Africa by 2025, and the World Bank suggests that expanding internet use at high-income country rates could add 140 million new jobs and $2.2 trillion to African GDP.
• The AfCFTA can help reverse 'de-industrialisation' by allowing companies to benefit from economies of scale, increasing production capacity and diversifying the manufacturing base beyond raw materials.

APA

TEMPEST, A. (2020). The Digital Economy and Ecommerce in Africa – Drivers of the African Free Trade Area? South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2020/05/The-digital-economy-and-ecommerce-in-Africa_Special-Report.pdf

Chicago

TEMPEST, ALISTAIR. The Digital Economy and Ecommerce in Africa – Drivers of the African Free Trade Area? South African Institute of International Affairs, 2020. https://saiia.org.za/wp-content/uploads/2020/05/The-digital-economy-and-ecommerce-in-Africa_Special-Report.pdf.

Wikipedia

{{cite report |last1=TEMPEST |first1=ALISTAIR |title=The Digital Economy and Ecommerce in Africa – Drivers of the African Free Trade Area? |publisher=South African Institute of International Affairs |date=June 2020 |url=https://saiia.org.za/wp-content/uploads/2020/05/The-digital-economy-and-ecommerce-in-Africa_Special-Report.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{tempest2020digital, author = {TEMPEST, ALISTAIR}, title = {{The Digital Economy and Ecommerce in Africa – Drivers of the African Free Trade Area?}}, institution = {South African Institute of International Affairs}, year = {2020}, month = jun, url = {https://saiia.org.za/wp-content/uploads/2020/05/The-digital-economy-and-ecommerce-in-Africa_Special-Report.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }